HR 1878 IH

To provide supplemental payments to dairy producers based upon their annual milk marketings and to provide additional payments to dairy producers for any month in which the prices received by producers for milk for the preceding three months is less than a target price of $12.50 per hundredweight.

To provide supplemental payments to dairy producers based upon their annual milk marketings and to provide additional payments to dairy producers for any month in which the prices received by producers for milk for the preceding three months is less than a target price of $12.50 per hundredweight.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `National Family Farm Dairy Equity Act of 2001'.

SEC. 2. DIRECT PAYMENTS TO DAIRY PRODUCERS BASED ON ANNUAL MILK MARKETINGS.

(a) PAYMENTS REQUIRED- The Secretary of Agriculture shall make payments under this section to qualified producers on a farm for milk produced in the United States and marketed by the producers for commercial use.

(b) AMOUNT OF PAYMENT- Subject to the production limitations in subsection (c), the total amount paid to producers on a farm under this section for a calendar year shall be equal to $0.50 per hundredweight on the smaller of--

(1) the producers' total milk production during that calendar year; and

(2) 2,600,000 pounds.

(c) PRODUCTION AGREEMENT- To be eligible to receive a payment under this section, the producers on a farm shall enter into an agreement with the Secretary to limit total milk marketings from the farm during the calendar year to not more than the sum of--

(1) the base milk production history for the farm, as determined under subsection (d); and

(2) the demand adjustment factor for the farm, as determined under subsection (e).

(d) BASE PRODUCTION HISTORY-

(1) DETERMINATION- The base milk production history for a farm for a calendar year shall be equal to the average annual quantity of milk produced and marketed from the farm for commercial use, determined using the production and marketing records for the previous two calendar years. After the first year in which payments are made under this section to producers on a farm, the base production history for the farm for each subsequent year shall be adjusted by the percentage change in the demand adjustment factor for the previous year.

(2) NEW PRODUCERS- In the case of a farm that does not have a production history for the previous two calendar years, the Secretary shall establish an appropriate production base for the farm based on the size of the dairy operation.

(e) DEMAND ADJUSTMENT FACTOR- The demand adjustment factor applicable to a farm for a calendar year is the amount equal to the product of--

(1) the base production history in effect for the farm; and

(2) the percentage change in the estimated United States consumption of milk and dairy products on a per-capita basis and the percentage change in the population of the United States during the previous calendar year, as determined by the Secretary.

(f) REPAYMENT- If the Secretary determines that annual milk marketings on a farm exceed the quantity permitted for the farm under the agreement entered into under subsection (c), the Secretary shall require the producers on the farm to repay all payments made under this section to the producers for that calendar year. The amount repaid shall include interest calculated at the rate equal, to the extent practicable, to the cost to the Commodity Credit Corporation of borrowings from the United States Treasury for the relevant time period.

(g) RELATION TO OTHER PAYMENT AUTHORITY- Payments under this section for a calendar year do not count toward the $50,000 per farm limitation in section 3(d)(1).

(h) TIME FOR PAYMENTS- Payments required under this section shall be made on a quarterly basis during the calendar year.

SEC. 3. ADDITIONAL PAYMENTS TO DAIRY PRODUCERS TO OFFSET LOW MILK PRICES.

(a) DEFINITIONS- In this section:

(1) AVERAGE MILK PRICE- The term `average milk price' means the average price under the Federal milk marketing orders of Class III milk (or milk used to produce cheese) and Class IV milk (or milk used to produce butter and nonfat dry milk) for the preceding three-month period.

(2) CLASS I MILK- The term `Class I milk' means milk classified as Class I milk under a Federal milk marketing order.

(3) CLASS II MILK- The term `Class II milk' means milk classified as Class II milk under a Federal milk marketing order.

(4) CLASS III MILK- The term `Class III milk' means milk classified as Class III milk under a Federal milk marketing order.

(5) CLASS IV MILK- The term `Class IV milk' means milk classified as Class IV milk under a Federal milk marketing order.

(6) FEDERAL MILK MARKETING ORDER- The term `Federal milk marketing order' means a milk marketing order issued under section 8c of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with amendments by the Agricultural Marketing Agreement Act of 1937.

(7) SECRETARY- The term `Secretary' means the Secretary of Agriculture.

(8) TARGET PRICE- The term `target price' means $12.50 per hundredweight for milk containing 3.50 percent butterfat.

(b) PAYMENTS REQUIRED- The Secretary shall make a payment under this section to producers on a farm for any month in which the average milk price applicable to that month is less than the target price. Producers shall be eligible for payments regardless of whether they market their milk within the Federal milk marketing order system. Payments for producers operating outside the Federal order system shall be calculated to be equivalent to payments for producers operating within the Federal order system.

(c) AMOUNT OF PAYMENT- Subject to subsection (d), the amount of the payment to be made to producers on a farm under subsection (b) for a month shall be equal to the following:

(1) The difference between the target price and the average Class III milk price multiplied by the percentage of milk used as Class III milk of the total amount of milk marketed by the producer, as determined by the Secretary.

(2) The difference between the target price and the average Class IV milk price multiplied by the percentage of milk used as Class IV milk of the total amount of milk marketed by the producer, as determined by the Secretary.

(3) The difference between the target price and the average Class I milk price multiplied by the percentage of milk used as Class I milk of the total amount of milk marketed by the producer, as determined by the Secretary.

(4) The difference between the target price and the average Class II milk price multiplied by the percentage of milk used as Class II milk of the total amount of milk marketed by the producer, as determined by the Secretary.

(d) LIMITATIONS-

(1) PAYMENT LIMITATION- Maximum payments under this section for a calendar year may not exceed $50,000 per farm.

(2) QUANTITY LIMITATION- The producers on a farm shall be eligible for payments under this section for a month for not more than the smaller of the following:

(A) The producers' average monthly production, determined using the production during the previous calendar year and the current calendar year.

(B) 216,666 pounds produced monthly.

(C) Some other production base for the farm considered appropriate by the Secretary.

(3) NEW PRODUCERS- In the case of producers on a farm who do not have a production base for the previous calendar year, the quantity limitation otherwise applicable under paragraph (2)(A) shall be based on current monthly production only.

(e) TIME FOR PAYMENTS- Payments required under this section for a month shall be made not later than the 21st day after the end of the month.

SEC. 4. GENERAL PROVISIONS.

(a) FARM RECONSTITUTION- The Secretary shall carry out this Act in such a manner that there are no additional outlays under section 2 or 3 as a result of the reconstitution of a farm that the Secretary determines occurred in whole or in part for the purpose of increasing the amounts received as payments under such section.

(b) ADMINISTRATION; FUNDING SOURCE- The Secretary shall carry out this Act using the funds, facilities, and authorities of the Commodity Credit Corporation.

(c) PERIOD OF EFFECTIVENESS- This Act shall be effective only during the period beginning on January 1, 2002, and ending on December 31, 2006.

(d) COMPTROLLER GENERAL REPORT- Not later than three years after the date of the enactment of this Act, the Comptroller General shall submit to Congress a report that analyzes the effect of the operation of this Act on farm income, milk production levels, milk prices, and Government and consumer costs.